“Only the paranoid survive.” I have no idea when I first said this, but the fact remains that, when it comes to business, I believe in the value of paranoia. I believe that the prime responsibility of a manager is to guard constantly against other people’s attacks and to inculcate this guardian attitude in the people under his or her management.

Andy Grove

The single most important fact about war – and business – is uncertainty. Whether you are in war or business, you never know what will happen next, or even ultimately. You are dealing with probabilities and unknowns. This is often referred to as “the fog of war,” and the only known antidote for the fog of war (and business) is paranoia.

Where does this uncertainty come from? A principle cause is “friction,” a term first used by the military theorist Clausewitz to describe the chaos of battle. The simplest things become hard: plans are lost or misunderstood; units get lost on the way to the battlefield; soldiers fire on friendly forces; fear paralyzes a leader; a radio message is garbled and misunderstood, weather delays an attack. The list goes on and on. This is one of the reasons why soldiers are notoriously prudent and risk conscious. They know that the best laid plans fall apart at the worst possible time for seemingly inconsequential reasons.

The second source of uncertainty in war is that “the enemy gets a vote.” In other words, there is an enemy out there trying to do the same things that you are trying to do, and he’s willing to kill you in order to do them. It’s a very sobering thought, and also humbling. This is why the cardinal sin of military strategy is underestimating the enemy.

So what does this have to do with business? Well… a lot. You can come up with a brilliant business strategy, but a seemingly insignificant event can counter it, without anyone trying to deliberately defeat you. Add to that all the potential for screwing things up. For instance, a key supplier can’t deliver on time, causing you to delay production, leading to unfulfilled orders, enabling a competitor to offer a replacement to your customers, allowing him to gain a foothold in what you considered protected territory. Get the picture?

But there is also the simple fact that competitors in the market are striving to get what you have: your customers. They want your customers to spend money on their products and services, and they are willing to do whatever is necessary (within limits of course, but sometimes not) to get it. As Andy Grove said , “The more successful you are, the more people want a chunk of your business and then another chunk and then another until there is nothing left.”

 

The Solution? Never Fight Fair

So what do we do about these two sources of uncertainty? In the case of friction, the most important thing is to build in redundancy, both systemically and in plans. However, that’s not really the theme of this book, though it will be a constant throughout.

The really important matter is that your competitors – like the enemy – are out to get you by gaining and maintaining an unfair advantage with your customers. In other words, they are ready and willing to fight unfairly. You must be ready and willing to do the same.

We will apply tried and true principles, stratagems, and tactics from the field of warfare and military strategy. Military strategists have been thinking about these matters for centuries, millennia even. They assume that things can and will go wrong (friction), that there is inherent uncertainty (the fog of war), and that your opponent(s) is (are) out to get you. That kind of paranoia can be very useful in business.

 

Questions

  1. What uncertainties frame your business?
  2. What constitutes “friction” in your business?
  3. What “unfair” advantages do your competitors have?
  4. What “unfair” advantages do you have?
  5. How can you develop more of these?

© 2010 Richard Martin. Quotes and reproduction are permitted with proper attribution.

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